MiT Stock Down 6% Despite Q2 Loss Narrowing Y/Y on DCS Buyout

Shares of Moving iMage Technologies, Inc. MITQ have declined 6.4% since the company reported its earnings for the quarter ended Dec. 31, 2025, underperforming the S&P 500 index’s 1.5% decline over the same period. Over the past month, the stock has fallen 16.2% compared with a 1.9% drop in the broader market. The sharper pullback suggests investors have taken a cautious stance despite improvements in the company’s quarterly performance.

For the second quarter of fiscal 2026, MiT incurred a net loss of 4 cents per share, narrower than a loss of 5 cents per share in the prior-year quarter. 

Revenues rose 10% year over year to $3.8 million from $3.4 million in the prior-year period.

Gross profit increased 24% to $1.2 million, compared with $0.9 million a year earlier, while gross margin expanded to 30.7% from 27.2%. The improvement was attributed primarily to a greater mix of higher-margin product revenues.

Operating loss narrowed to $0.4 million from $0.6 million in the year-ago quarter. Net loss narrowed to $0.4 million from $0.5 million in the year-ago quarter.

Moving iMage Technologies, Inc. Price, Consensus and EPS Surprise

Moving iMage Technologies, Inc. price-consensus-eps-surprise-chart | Moving iMage Technologies, Inc. Quote

Other Key Business Metrics

MiT closed the quarter with working capital of approximately $4.5 million, including net cash of $3.9 million, and no debt. Cash declined from $5.7 million at June 30, 2025, to $3.9 million at Dec. 31, 2025, largely reflecting the $1.5 million cash outlay for the DCS loudspeaker line acquisition and increased inventory levels. Inventory rose to $3.1 million at quarter-end from $2.1 million at June 30, 2025.

Operating expenses increased 5.1% year over year to $1.6 million, primarily due to higher legal expenses. Despite the rise in expenses, improved gross profit helped narrow operating losses. However, operating cash flow for the six months ended Dec. 31, 2025, showed a net use of $1.8 million, compared with positive operating cash flow of $0.04 million in the prior-year period, driven in part by working capital changes, including higher inventories.

Management Commentary

Chairman and CEO Phil Rafnson described the second quarter as productive, highlighting the 10% revenue growth during what is typically a seasonally slower period for exhibitors focused on holiday box office performance. He cited continued demand for immersive and premium large-format cinema experiences and expressed cautious optimism about a rebound in domestic box office receipts in calendar 2026.

President and COO Francois Godfrey emphasized progress in integrating the DCS loudspeaker line, acquired for $1.5 million in cash during the quarter. The company has signed distribution agreements with more than 25 cinema equipment dealers across EMEA, APAC, the Americas and SAARC regions, expanding DCS promotion to over 50 countries. Initial shipments have been executed in multiple countries, including the United States, United Kingdom, Taiwan and Germany.

Factors Influencing the Quarter

Revenue growth was supported by steady order flow for parts, replacement products and higher-margin proprietary offerings during a typically slower exhibition period. Gross margin expansion reflected a higher percentage of product revenues and operational execution. At the same time, operating expenses were pressured by elevated legal costs. 

The DCS acquisition also influenced balance sheet dynamics, increasing inventory and reducing cash balances, while positioning the company to broaden its proprietary product portfolio and international footprint.

Guidance

Management expects third-quarter fiscal 2026 revenues of approximately $3 million, reflecting customary seasonality and an initial ramp in DCS-related sales. Gross margin percentage is anticipated to return to prior-year lower levels, according to commentary in the earnings materials.

Other Developments

During the second quarter of fiscal 2026, MiT completed the acquisition of the DCS premium cinema loudspeaker line from QSC for $1.5 million in cash. The company stated that the acquisition expands its proprietary product offerings, enhances its value proposition in North America and provides an entry point into international markets where DCS has an established installed base. Management indicated it expects to recoup its cash investment over the next few years through sales of acquired inventory and related products.

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